Business Meta Inc Essay

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This paper is about Facebook. I already did a presentation on face book and now I should write a paper on Facebook. Please read the instruction of this paper and write the paper. Important thing the main goal of this paper to apply what we study so please read all the PP and Apply all the concepts.

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What is your Screen-Time of Social media activity ? Is your Social media activity Controlled by yourself? Is your Social media activity Controlled by Social media itself? ? ? Class Result (in %) ? What is Meta Platforms?  Meta Platforms, Inc., is an American multinational technology conglomerate based in Menlo Park, California, doing business as Meta and formerly known as Facebook, Inc., and TheFacebook, Inc.  The company is the parent organization of Facebook, Instagram, and WhatsApp, among other subsidiaries.  Meta products and services include Facebook, Messenger, Facebook Watch, and Facebook Portal. What is Meta Platforms? It has also acquired Oculus, Giphy, Mapillary, Kustomer, Presize and has a 9.99% stake in Jio Platforms. In 2021, the company generated 97.5% of its revenue from the sale of advertisement placements to marketers. In 2021, Meta's (formerly Facebook Inc) revenue amounted to roughly 117 billion US dollars, up from around 86 billion U.S. dollars in the previous fiscal year. Meta Platforms, Inc. has 3.6 billion monthly active users Goals, Mission and Value Statements sfs Code of ethics and Code od Conduct Keep people safe and protect privacy—we are committed to protecting our communities from harm. The Issue: Ethics & Social Responsibility Manipulative Algorithm Facebook is keeping track of your personal online activity. User privacy and data protection - Cambridge Analytica Scandal Posting conspiracy theories – Qanon conspiracy theory Unfair Exceptions to its false news Fake News & Hate Speech Manipulative Algorithm The algorithm treats reactions such as “angry,” “love,” “sad,” and “wow” as five times more valuable than traditional “likes” on the social media platform. one of its goals is to keep people on the platform, so that they see more ads. Like, Comment and Share Facebook’s ‘Dangerous’ Algorithms Facebook tracking your personal online activity Facebook keeps track of your online activity, even after you’ve closed out of the app. Whether you’re using Google Maps, Safari, Instagram or playing a game on your phone. Facebook may be taking note of your activity. online activities generates data. Businesses that you’re looking at will share that data with Facebook. Facebook uses these data to target certain ads. User privacy & data protection - Cambridge Analytica Scandal Harvesting personal data of millions of people’s Facebook profile without their consent and using it for political advertising purposes. Cambridge Analytica harvested information from over 87 million Facebook users through an external app in 2015. Trump's campaign hired Cambridge Analytica in June 2016 to help target ads using voter data gathered from millions of adults in the US. Destabilizing democracy. Using the platform to manipulate political decisions. OFF-Facebook Activity? Should Facebook be allowed to track your activity? Posting conspiracy theories – Qanon conspiracy theory In October 2017, an anonymous user named “Q Clearance Patriot” began posting conspiracy theories In 2020, QAnon supporters flooded social media with false information about Covid-19, the Black Lives Matter protests and the presidential election Unfair Exceptions to its false news Treating news outlets differently based on political slant. A study of user behavior on Facebook results that company’s algorithms fuel the spread of misinformation over more trustworthy sources. Facebook whistleblower Frances Haugen What is the most principle of Byron’s 10 principles has been violated by Facebook? Integrity Veracity Human Dignity Common Good Psychological and Mental Health Issues Lack of Concentration Lack of Creativity Isolation. Fear of missing out (FOMO) Depression and anxiety Cyberbullying Mental effects of Social Media Data on Facebook users as of March 2022 2.91 billion monthly active users 2.91 billion users equals 36.8% of Earth’s 7.9 billion people  Approximately, 110 million users of age 13-17 years Poor performance GRI Aspects: Human Rights Non-discrimination Security Practices Human Rights Grievance Mechanisms Society Public Policy Compliance Grievance Mechanisms for impacts Product Responsibility Customer Health and Safety Customer privacy Of the four approaches to social responsibility, where would you rank Facebook? MGT 501 Group Paper This case does differ from the RSJ in the News case somewhat. First, it is a paper, not a presentation. Second, it is an assessment of an overall firm, and not one particular issue facing a firm. While it does not affect your score, sustainability themes will be especially encouraged. I’ve presented the keys to an effective paper through a rubric on the following page. As is always the case in my graded written work, the most important thing is a highly transparent and scholarly application of course material in processing, analyzing, and making recommendations about the firm you choose. Demonstrate to me how much of the course material you have mastered, and do this in a way that is obvious and unmistakable. But do not rehash, recite, or define. Instead, always apply. Areas to integrate into your paper: • Firm’s mission, vision, and corporate governance and their relevance to course themes • Codes of ethics and conduct, how well do these conform with standards and are they effective in practice? • Assessment of Byron’s 10 principles and how well (or not) they are in evidence at the firm • Assessment of leadership ethics and corporate culture • Analysis of key stakeholder concerns and pressures, ideally informed at least in part from typical concerns and pressures raised in Savitz’ text • Assessment of the firm with respect to the two CSR frameworks presented in class • CSR practices generally and how well they map to best practices (or not) • Assessment of the firm with respect to existing sustainability practices, how well they conform to best practices as well • Assessment of the firm’s emerging and newer CSR & sustainability initiatives and their conformance and application of Savitz’ ideas and prescriptions • Recommendations for improvement going forward Report length should be somewhere in 12-17 page range double-spaced. Longer reports are acceptable but should at least be well-edited. Remember that your goal here is two-fold. One is to analyze/make recommendations for the firm, the other is to demonstrate to me how much you have learned from this class. Obviously, the two goals are closely related but don’t lose sight of either in pursuing the other. Use a referencing/citation method as appropriate; I am not a stickler for this but it must be reasonable and APA is always a good choice. Paper rubric Topic Paper provides appropriate and well-justified analysis of firm with appropriate breadth and coverage Paper makes appropriate, insightful, specific recommendations building from analysis. Key arguments and points are also well-justified Paper draws from class concepts in a way that is transparent and demonstrates mastery of course readings, lectures, etc. Paper follows the general format and style appropriate for paper, is well written with solid grammar, composition, and style TOTAL Comments: Points earned /20 /20 /40 /20 /100 ++ Excellent, + Competitive, 0 OK, - deficient, -- absent Mission, Vision, Gov. Codes of ethics and conduct, effective? Byron’s 10 and evidence Leader ethics and corporate culture Key stakeholder concerns and pressures (Savitz) 2 CSR frameworks CSR generally and v. best practices SUS generally and v. best practices Newer initiatives & Savitz appl. Recommendations TOT Anal/Just Recs Course Appl Writing TOT • MGT 501 Responsibility, Sustainability, Justice 11: Sustainability: Triple Bottom Line (3BL) Dr. Robert C. Giambatista, PhD 1 Agenda • Population clock math • Questions about remaining work? • Tonight o RSJ Presentation: Nestle o Begin this module • Next week o Conclude module, class o Peer evaluations 2 Overview of this module • Triple Bottom Line: What is it? o General concepts, high-level practices o Examples of firms • General & supply chain • Managing the 3BL: A Systemic Approach o o o o Genesis in MBO and Control Systems Step I: Identifying baselines Step II: Developing Initiatives Step III: Manage the Process 3 3BL Typical Measures • Savitz: An attempt to capture the essence of sustainability by measuring the impact of an organization’s activities on the world • People, Planet, Profits Economic Environmental Social Sales, profits, ROI Pollutants Emitted Health & Safety record Taxes paid Carbon Footprint Community impacts Monetary Flows Recycling, reuse Human rights; privacy Jobs Created Water & Energy Use Product responsibility Supplier Relations Product impacts Employee Relations Total Total Total 4 GRI Overview (zoom in next slide) 5 GRI Environmental Detail 6 Savitz: Corporate Accountability in the Age of Sustainability • This can also help identify the foci of 3BL/Sustainability efforts o “What can we do to…” 1950s: Make money Provide Philanthropy 1970s: Make money Provide Philanthropy Protect environment Safeguard products 2010s: Make money Provide Philanthropy Protect environment Safeguard products Promote diversity Improve communities Protect workers Prevent child labor Foster public health Ensure human rights Alleviate poverty Provide technology Protect privacy Oppose corrupt regimes Patrol supply chain Engage stakeholders Measure & report Continuously improve 7 7 Savitz: The Age of Sustainability  Factors driving the trend (summarized from ch.3)  Beyond physical/natural environment Stakeholder Proximity & Influence  Empowerment:  Freedom & democracy empowers individuals who begin to question status quo  Empowered employees, customers, investors who question  Activism/empowered stakeholders & “voting with feet”  Networked world:  More news gets out, and more quickly  Activists form/build networks more effectively/efficiently  Interdependence:  Socially conscious world:  More concern over stakeholders, justice, environment, etc.  Corporate power  , governmental power   In many cases, firms are the only entity with the power and skills to do anything 8 Best Practices Selected Examples What are firms doing? 9 Let’s start with • One example practice: Cap and trade… • And one fact: Solar energy o solar panel costs were 60% lower in the second quarter (Q2) of 2013 than they were in early 2011. o Update: 2015 another 15% or so o o o http://cleantechnica.com/2013/09/19/cost-solar-power-60-lower-early-2011us/#5xZgh0ReKQCSRyIw.99 http://costofsolar.com/cost-of-solar-panels-10-charts-tell-you-everything/ https://blogs.scientificamerican.com/plugged-in/the-price-of-solar-is-declining-to-unprecedented-lows/ • Before getting into general concepts • In Phila., solar installation pays back in 14 yrs o Many cities are even better paybacks (in years): • Portland, OR 1 yr, Seattle, WA 4 yrs, Boston 3 yrs, DC 2 yrs, NY 6 yrs o http://news.energysage.com/how-much-does-the-average-solar-panel-installation-cost-in-the-u-s/ 10 Cap and Trade concept • A governing body (government, internal corporate governance, etc.) sets rules for GHG emissions • A market is established with a cap on allowable emissions and a price per standard unit of emission o Those under cap can sell the differential o Those over can buy them • Allows for market processes • Allows for stable, gradual change shutting down polluting plants • Creates incentives for improvement • Cap can be lowered • Most importantly: vs. o Concept can be used to commodify anything 11 Cap and Trade Success Stories • 1980s: Depletion of ozone layer linked to emissions • 1987: President Reagan signs Montreal Protocol o Cap and trade as one provision • 2006: UN declares protocol is working • 1990: Present GHW Bush signs Clean Air Act o Cap and trade to reduce, among others, sulfur emissions contributing to acid rain o Passes Senate 89-10, House 401-25 o Widely acclaimed as success by EPA, industry, economists 12 Ceres awards • Ceres: non-profit focused on sustainable business o Helped found the GRI, with another non-profit and the UN • Cited many practices o I will organize them into 2 areas, loosely defined o Administrative o Operations & Other • Purpose o To identify some best practices o To reflect on how 3rd party recognition/honors help firms 13 Best Practices: Administrative 14 Administrative: More 15 Admin: More 16 Operations & Other 17 Ops: More 18 Ops: More 19 Sustainable Supply Chains Thinking outside the box, er, firm 20 What is a supply chain? • A supply chain considers, usually from the perspective of a firm, the entire scope of activities from raw materials to end consumers. o Many parties (aka stakeholders) are outside the firm’s employ. • Supply Chain Management is the integrated management of this nexus of activities and entities o Input side activities sometimes called “upstream” o Output activities “downstream” Figural representations As center of hub As part of a complex network As link in a chain Sustainable supply chain management (SSCM) • Reducing material, monetary, and environmental waste is one theme • General efficiencies is another o However, emphasis is on stakeholder fairness and justice instead of mere cost-cutting • Upstream and downstream relationships o Accountability, ensuring fair treatment, environmental impacts, etc. • Broad and narrow SCM definitions o Legacy of SCM is Operations Management, Logistics, etc. o Now considers many areas such as Marketing • Ethical marketing is in SSCM purview, e.g. Social Standards for Suppliers • Source: o Kagnicioglu, Deniz and C. Hakan Kagnicioglu (2007), “Descriptive Analysis of Social Standards for Suppliers in Top 100 Fortune Global 500 Companies,” Journal of American Academy of Business, Cambridge, 11 (March), 330-337. • Method: o Content analysis of codes of conduct reported on Web sites (n = 79) • 10 no CoC • 11 don’t include suppliers • Most frequently included factors (see next): • Companies monitoring their suppliers (84%) • Other observations & conclusions o Tech sector ahead of others o Awareness of CSR is high and extended to suppliers o Europe & US ahead of Asia somewhat % of labor standards mentioned in sample 5 8 21 Discrimination 8 Health Force lbr Child Freedom 11 19 Wages Hours Security 14 14 Wilhelm • Lee Scott, CEO Walmart: o Reduction of waste & non-renewable energy in chain o Engagement with suppliers, just 1 example: • Unilever concentration of detergent saves water, plastic, cardboard, shelf space, shipping/storage • AND: educates consumers, shows envir. benefit without having to change behavior. • LEAN manufacturing o A production practice that considers the expenditure of resources for any goal other than the creation of value for the end customer to be wasteful, and thus a target for elimination. Working from the perspective of the customer who consumes a product or service, "value" is defined as any action or process that a customer would be willing to pay for. o “Start with the end in mind” • What will customer pay for. Eliminate everything else you can. • Not just internal to firms but within and across links in SC Assessment of suppliers • Walmart scorecard o http://www.walmartsustainabilityhub.com • HP o Code of conduct (for suppliers) o Periodic audits • Supplier Relationships o Employee engagement, training, sharing of best practices • One challenge in learning is that these assessments are usually confidential o Another clue that they are highly value-adding • Apple (open up code of conduct for suppliers document) Walmart Sustainability Hub • • • • To focus our efforts on the most important areas, we use various tools to gain greater visibility into the world’s vast network of product supply chains. Chief among them is the Sustainability Index, which was developed in collaboration with suppliers, leading NGOs and the scientists at TSC. The Index provides a snapshot of the social and environmental practices and outcomes in a broad array of products and supply chains. The Sustainability Index gathers and analyzes information across a product’s life cycle—from sourcing, manufacturing and transporting, to selling, customer usage and end of use. TSC research first identifies the materially significant environmental and social issues—or “hot spots”—across the product life cycle. At the same time, “improvement opportunities” are identified to address those hotspots. The supply chain hotspots and improvement opportunities are then summarized in a category sustainability profile. Next, key performance indicators (KPIs) are developed in the form of survey questions that are used to measure sustainability performance for a particular product category. Suppliers then respond to the surveys for the specific product categories they supply, each covering up to 15 issues that TSC has deemed critical. The surveys paint a picture of the sustainability challenges down to the category level for all kinds of items, from tomatoes to toys. We use the data from the surveys to identify key social and environmental hotspots and to set an agenda as we work with our suppliers to drive continuous improvement. We also use it to identify opportunities for special attention, such as fertilizer optimization or improved animal welfare, to help drive more substantial change quickly. Finally, the survey data is integrated into decision-making tools throughout the business. The use of the Sustainability Index also sets the expectation that Walmart isn’t looking for change at the margins with a few niche products. We’re trying to raise the bar for all items we stock. 2000+ suppliers completing 5300+ surveys 28 Dole: Costa Rican supply • More rail, less truck • Reduction of fossil-fuel based agri inputs • Updating refrigerated container fleet o Improved energy efficiency o Note: Many firms with aging facilities/infrastructure can use sustainability concerns to get projects “over the hump” McDonald’s: Let’s surf a bit and talk about what we find • McDonald’s approach o http://www.aboutmcdonalds.com/mcd/sustainability/signature_programs/best_pr actices/best-of-sustainable-supply.html o http://www.aboutmcdonalds.com/mcd/sustainability/sustainability_CR_reports.ht ml o http://www.aboutmcdonalds.com/content/dam/AboutMcDonalds/2.0/pdfs/2014_b est_of_sustainable_supply.pdf • Look at category winners. • Thoughts? • Yes, but skeptics? o The greenwashing charge o Perhaps, but remember networked age/interdepedence o Putting this out there on net puts you “on the hook” publicly (commitment) o What’s the alternative? No progress at all? 31 Some Specific Supply Practices • • Reduced Use of Petroleum-Based Substances Sustainable Wood o Home Depot: Vendor certification by Forest Stewardship Council • Storage/Inventory o Good inventory/logistics have been “known” for decades (EOQ, Just-in-Time, etc.), but improvements can still be made • Bonus: Easy to justify cost • Packaging o Reduce, Reuse/Recycle, Redesign (Biodegradable) • Transportation/Distribution o Fuller trucks (better packing) o Packing pallets on 2 levels – more trips/day • One benefit: No sleeping berths needed, improves fuel efficiency o Optimization of weight/capacity to reduce truck loads • Routing o UPS minimal left turns http://www.wired.com/2007/12/no-left-turn-so/ • Modify GPS/Navigation • Sourcing o More local sourcing, simpler sourcing networks Better Uses for Waste • Andersen (windows) o Wood waste from manuf → composite → windows & doors • 50% ROI!!! • Ben & Jerry’s o Ice cream waste goes to farm pigs • Starbucks o Grounds given away for garden use • Product take backs o Electronics, e.g. o All or pieces can be recycled More Chunky Monkey, Please! Interview with Senge • Sustainability issues are often supply chain issues. How do you effect change across a supply chain? o First, you focus on the nature of the relationships. In most supply chains, 90% of them are still transactional. If I’m a big manufacturer or retailer, I pressure my upstream suppliers to get their costs down. There’s very little trust and very little ability to innovate together. That must change, and it is starting to. o Second, you learn to work with NGOs and other nonbusiness entities. They’ll give you access to expertise that you can’t grow fast internally. Water is a classic example. A few years ago, Coca-Cola decided to cut the water used to make a liter of Coke from more than three liters to 2.5 liters. But it was overlooking the 200-plus liters it took to grow the sugar that went into that Coke. The company found that out because it partnered with the World Wildlife Fund, which knew how to analyze the water footprint of the value chain. Coca-Cola now knows the difference between dripirrigated sugarcane and flood-irrigated sugarcane. Supply Chain Partnering • Three types of relationships o Competitive: Usually cost/price based o Compromising: Try to solve problems, some competitive negotiating, establish some relationships o Collaborative: Win-win • Costs and benefits of each approach Themes • • • • Not a comprehensive list of practices Idea is to stimulate creativity & possibility Piggy back off of good supply chain practices generally Expand on efficiency into area of social issues o (labor, etc.) • Interdependence o Example: Foxconn affects Apple • Supply chain view as supplement/complement to firm-level view Best Practices: A Mindset • TED Talks https://www.ted.com/talks/ray_anderson_on_the_business_logic_of_sust ainability#t-924558 https://www.ted.com/talks/leyla_acaroglu_paper_beats_plastic_how_to_r ethink_environmental_folklore 44 Sustainability Initiatives & Programs: A Methodology Savitz as a framework 45 Characterizing Savitz Approach 1. Establish a baseline 1. Self-assessment (chapter 7) 2. Identify immediate and “sweet spot” opportunities 1. Turn crises into opportunities (chapter 8) 2. The sweet spot (chapter 9) 3. Pursue minimization, then optimization (chapter 9) 4. Implement strategy (chapter 10) 5. Manage the process & people 1. Managing stakeholders (chapters 11,12) 2. Managing culture (chapter 14) 6. Measuring & reporting progress (chapter 13) 46 Step I. Baseline 47 Identify Baseline • First need to know what we are going to track o Examples: Carbon emissions, Pollutants, Energy use, etc. • Chicken and egg challenge o Need baseline before pursuing initiatives o Need initiatives before determining metrics, etc. • Therefore o Think of this phase as iterative o Identify some obvious: • Metrics firms are reporting • Sustainability sweet spot opportunities • Benchmarking best practices - imperatives/opportunities • To facilitate understanding, we’re going to talk about some common/best practices first 48 1) Self-assessment • Goal: Identify where we stand with respect to sustainability o Who are we? Identity/values/climate • • • • Existing internal documentation Those of competitors How stakeholders view you Public sources o What do we do? Social & environmental impact plus business model • Are products and services harmful? • Secondary impacts, side effects o How do we do it? Like above but more broadly on employees, supply chain, communities, etc. • Chemicals, pollutants, human/labor rights, animal concerns, stakeholder relationships 49 Learning More • • • • • GreenBiz Global Reporting Initiative (GRI) World Business Council for Sustainable Development ISO 14000 Cooperation among competitors o Can be especially helpful for “Tragedy of the Commons” situations like overfishing • Poke around the internet o Triple Bottom Line tool (will focus on this next week) • http://www.tbltool.org/files/tbl_tool_users_guide.pdf 50 Detailed resources • GRI guidelines o https://www.globalreporting.org/resourcelibrary/GRIG4-Part2Implementation-Manual.pdf • Start around p. 86 • Triple Bottom Line toolkit user’s guide o http://www.tbltool.org/files/tbl_tool_users_guide.pdf 51 The GRI • Global Reporting Initiative o More than 80% of 250 largest corps in world now on board o Leading benchmark for measuring, monitoring and reporting corporate sustainability efforts • Primarily a reporting methodology o Principles: • Stakeholder inclusiveness, sustainability context, materiality, completeness, balance, comparability, accuracy, timeliness, clarity, and reliability o Domains • 3BL: Economic, Environmental, and Social • Each domain has aspects and micro-aspects o Environmental → Materials, energy, water, biodiversity, emission, effluent/wast, products/services, compliance, transport, overall, supplier enviro assessment, enviro grievance mechanisms o Energy → consumption w/in org, outside org, intensity, reduction of consumption, reductions in energy requirements of products and services 52 GRI: Snapshot of coverage 53 GRI Example 54 Another 55 GRI emphases • Relevant social & environmental concepts • Clear and complete definitions • Clear reporting methodology o How to measure, what to do and not to do • Provides basis for: o External reporting o Internal management • MBO & SMART analogies 56 GRI Pros and Cons • + Rigor, comprehensiveness, legitimacy, input to sustainability initiative, becoming a standard among >80% of largest corporations, creation of data for various purposes of value to management • - Costly (at least up front), not enough to actually engage in improvement from what I can see o Except year-to-year trend inspection o Provides the data to keep score • You provide the initiatives & programs • Hence I also show the TBL toolkit 57 Step 2: Identify & Exploit the Sweet Spot 58 A Starting Point: The Sustainable Sweet Spot • As Savitz states, sustainability is hard, but o Savitz also states its easy (sweet spot) o Step 1: • Identify the “low hanging fruit” or “heavy half” (80/20) solution • Ask, where are the ‘no-brainer’ opportunities for sustainability? • Which societal interests are easily and demonstrably justified as serving business’ interests? Business Interests Sweet Spot Societal Interests Sweet Spot: License to Operate Efficiency Gains Business Growth Innovation Inspiration 59 2) Sweet Spot: Crises Into Opportunities • Pepsi, Coca-Cola, and Kerala (India) o Both firms drawing water from local aquifers o 2002 drought → Protests o Pepsi: initial response • Hydrogeologists proved water drawn from separate source • Public didn’t care o Pepsi: sustainable response • Improve, expand community wells • Aggressive water management procedures o Increase recharge of aquifer o Coke’s response o Local response to responses • Coke plant shut down by gov’t • Activists also pressured to shut down Pepsi, and: o Local inhabitants stopped the movement to shut Pepsi down 60 Road Map & Examples • Start small and “sweet” o Pick “small wins”, easy wins, obvious wins • Look at customer needs o Volvo & safety vs. GM • Work with supply chains (W-M, McD’s examples) • Work with existing skill set o What are your core competencies? Start here. • Foresee future challenges & stay ahead of the game o Toyota Prius leading curve on hybrids vs. Ford, GM • Empower individuals (see examples slides) • Nike o From villain to hero (sort of) in 10-15 years o The Teflon effect • Reputation & attribution of trouble 61 Nike: transformation • Child labor: 6c/hr (1996) o CEO Phil Knight combative • Reform o 16 yrs old, education provided, NGO monitoring o Code of supplier conduct, internal monitoring, common monitoring for entire industry o Named suppliers, allowing for open checking o Helped create Higg index of sustainability • Since o Controversies have occurred but have been weathered o Nike is now routinely cited as a responsible and sustainable firm 62 Step 3: Minimization, Then Optimization From Good to Great Going beyond incremental fixes and re-inventing the firm 63 Minimize & Optimize • Minimize – being less bad. Optimize – being more good. Business Function Minimize Optimize Worker health and safety Reduce workplace accidents Create a healthy and happy workforce Environmental Protection Clean up hazardous wastes Use waste to restore environment or create new products Energy use Reduce the use of fossil fuels Shift energy generation to solar Product Packaging Reduce the use of needless Produce packaging that packaging biodegrades and contains seeds/fertilizer Customer service Respond more quickly to complaints Work with complainers to create new and better products 64 Min & Opt mindset • Minimize mindset is generally incremental • Optimize usually requires more creativity and radical thinking • TED talk o Helps give an appreciation for this mindset o https://www.ted.com/talks/leyla_acaroglu_paper_beats_plastic_how_to_rethink_environmental_folklore o General thoughts about this video? 65 Step 4: Implementation • Management by objectives o o o o What are our goals? SMART!!! What will we do to obtain our goals (strategies and tactics)? How will we measure our progress towards these goals? What processes will we build in to review this progress and revisit goals, strategies, measurement, etc.? 66 Key Performance Indicators: Hypothetical Example • • From MBO, what will be our metrics, how will we gather data on them, what will be the specific end goals and mileposts? Goal: o Eliminate all child labor in supply chain in 5 years • Metrics: Quantify whatever possible o 1st person (us) and 3rd person (Fair Labor Association, e.g.) audits o Metric 1 • Percentage of suppliers/total supply that uses ANY child labor o Metric 2 • Total % of supply labor that is taken by child labor o Key definitions • Child labor defined as any worker under the age of 15, etc. • Mileposts (example) o Year 1: Implement all procedures and identify baseline, communicate future with suppliers, look for alternative suppliers o Year 2: All suppliers must reduce child labor by 25% o Year 3: All suppliers must reduce by 50% or terminate business o Year 4: All suppliers must no longer use child labor at all or terminate business o Year 5: Assessment, ensure goal attainment, enact contingency plans, identify new goals, etc. 67 Savitz Dealing with Implementation Realities 68 Internal issues • Book goes into creating a sustainability staff o Cross-cutting, virtual • And HR implications: o Same basic arguments as module 5 on best practices in ethics 69 Managing Stakeholders: Influence Grids (fig 11.3-4 p207-9) • Identify all stakeholders and key issues important to them • Identify the level of support stakeholders have for your initiatives • Identify, from the issues/importances, how much influence stakeholders have • Create a 2*2 grid with 4 cells: o Empower: High support, low influence – empower these stakeholders to turn support into influence o Monitor: Low on both – not an imminent concern, but stay abreast of possible changes o Partner: High on both – Find opportunities to work together for mutual gain o Engage: Low support, high influence – these are traditional “adversaries” – as they say in negotiation, bring them to your side of the table, engage in dialog, find some areas of agreement, try to influence them towards moderation • Hershey example 70 Cultural change (applies to any change) • • • • CEO/Top Management buy in Champions High profile x-functional teams/task forces Environmental scanning / benchmarking o Proximal or adaptable success stories • Small wins → momentum • Formal and informal incentives o May need to change reward systems • Not just pay but status, “who gets ahead”, etc. • Metrics o Habit and institutionalization • Savitz (next slide) Creating a Culture of Sustainability Savitz, Chapter 14 • Sustainability vision or mission o Vision: Optimal desired long-term future state / compass o Alzheimer's Association: "Our Vision is a world without Alzheimer's disease." o Mission: Present/near term (1-3yrs) state/purpose: What we do, for whom, and how o Tesla (2017) – class discussion on these • Vision: “to create the most compelling car company of the 21st century by driving the world’s transition to electric vehicles.” • Mission pre-2016: “to accelerate the world’s transition to sustainable transport.” • Mission post-2016: “to accelerate the world’s transition to sustainable energy.” • Honest self-appraisal • CEO involvement and agenda setting • Long-term thinking 72 Best Practices: A Mindset • TED Talks o https://www.ted.com/talks/ray_anderson_on_the_business_logic_of_su stainability#t-924558 o https://www.ted.com/talks/leyla_acaroglu_paper_beats_plastic_how_to _rethink_environmental_folklore 73 Other tips and practices • Make reasonable estimates – don’t oversell, do reasonable projections/probabilities based on historical/industry data • Do sensitivity analysis (10% crisis risk vs. 1% crisis risk, 1% increased customers vs. 5% increased customers, 2% vs 10% increase in turnover • Find breakeven points & payback o At what risk/revenue/cost level does the project break even o If the project breaks even, do it – it’s not subject to profit maximization logic • Also: Project is probably “better” than this analysis because of unforeseen impacts, rising expectations, and because net neutral finance impact + social good = net gain Final quotes • Byron, p.214 o Do we create our ethical future with a vision of how we want the world to be, or does ethics simply evolve naturally over time and human experience? Whatever the nature of the evolution, I would hope that ethical principles … of courage and competence become part of ethical discourse. I am convinced that the principled person with the principled vision can find his or her way through the ‘murkiness’ into a more ethical future. It is an impossible journey only for those whose destination is themselves.” • RFK Final Story: Jose & Hamdi 76 TED Talks • Choi: Getting investors to champion social values & sustainability o https://www.ted.com/talks/audrey_choi_how_to_make_a_profit_while_making_a_difference • Anderson: Business logic of sustainability o • Mohr: The tradeoffs of building green (+: Short) o o • Life cycle assessment is a great way of thinking. Very good high-level view of sustainable design https://www.ted.com/talks/leyla_acaroglu_paper_beats_plastic_how_to_rethink_environmental_folklore?language=en James Hansen: Why I must speak out about climate change o • Goes into details of home building and how to think broadly about energy & sustainabiity in design and structure (embodied energy) https://www.ted.com/talks/catherine_mohr_builds_green?language=en Acarogle: Rethinking environmental folklore (common perceptions) o o • https://www.ted.com/talks/ray_anderson_on_the_business_logic_of_sustainability http://www.ted.com/talks/james_hansen_why_i_must_speak_out_about_climate_change?language=en Tesla: Can follow up Acarogle with this one o https://www.youtube.com/watch?v=ES1gRzEGALM What are some sources of sustainabile efficiences associated with Tesla 77 MGT 501 Responsibility, Sustainability, Justice 10: Sustainability: The Challenge Dr. Robert C. Giambatista, PhD 1 Tonight’s agenda • RSJ: H&M • Start the population clock o https://www.census.gov/popclock/ • End with population clock • Also, NYT: • https://www.nytimes.com/2016/11/24/science/global-warming-coastal-real-estate.html o SE Florida: 10 floods/yr now, 240 by 2045 o Sales (2015-16): +2.6% nationally, -7.6% in flood zones o Flood Insurance: $7000/yr vs. 200/yr in less flooded areas • Some houses will not be sold because of this o Median home price last 10 yrs: • Flooding risk = -4.4%, no risk = +29.7% 2 Sustainability Module agenda • Tonight: The Problem o What are some general problems in sustainability affecting business? • Next: 3BL & Best Practices o What are some metrics, benchmarks, exemplary actions that firms are actually engaging in? o What are supply chains and what are sustainability issues there? • Summary: Business case o What does research say about sustainabilty and business performance? o General comments on Sustainability & course 3 Sustainability definitions • Savitz: o An unsustainable action is one that harms the interests of one or more stakeholders • Eventually, this harm will reach a limit where it is unacceptable o By extension, sustainability would be consistently engaging in actions that avoid harming interests of stakeholders • Note that Savitz uses restrictive definitions of both ethics and social responsibility, but an expansive definition of sustainability o In actuality, very few actions are one or two without being all 3. Ethics Soc Resp Sustain 7 Other sustainability definitions • Investopedia (has note but do not see formal definition) • Wikipedia has both: Corporate Sustainability is a business approach that creates long-term consumer and employee value by not only creating a "green" strategy aimed towards the natural environment, but taking into consideration every dimension of how a business operates in the social, cultural, and economic environment. Their general sustainability term is more of an environmental sciences approach. • Sustainablemeasures.com o There may be as many definitions of sustainability and sustainable development as there are groups trying to define it. All the definitions have to do with: • Living within the limits • Understanding the interconnections among economy, society, and environment • Equitable distribution of resources and opportunities 8 Savitz: The Age of Sustainability  Factors (beyond physical/natural environment): Stakeholder Proximity & Influence  Note: I think some of these from ch3 are nearredundant so I’m re-organizing them:  Empowerment:  Freedom & democracy empowers individuals who begin to question status quo  Empowered employees, customers, investors who question  Activism/empowered stakeholders & “voting with feet”  Networked world:  More news gets out, and more quickly  Activists form/build networks more effectively/efficiently  Interdependence:  Socially conscious world:  More concern over stakeholders, justice, environment, etc.  Corporate power  , governmental power   In many cases, firms are the only entity with the power and skills to do anything  An imperiled world (the focus tonight) 9 Basic problems in sustainability • Overpopulation • Interdependence • Shrinking world: inability to escape impacts o Externalities: privatized gains, socialized losses o Internet, social media, etc. o More humans affected by environmental/social problems • Non-linear math, abstract vs. here & now o Some problems, like global warming & overpopulation do not follow linear processes, much more dangerous as a result • Public attitudes o Credibility of actors o Polarized public, politicization o Younger generation • Overly narrow view of profit (ST, only investor oriented) o The business usage of the word derives from the older and more general verb meaning • To gain an advantage or benefit, or to be beneficial to 11 An example of an externality • Of smoking costs, personal and social responsibility • Q: How much would you have to pay per pack (tax) for the health impact of cigarettes to be offset on a per pack basis • It’s actually an easy problem to solve; a few years back I went onto some governmental websites and solved it. o Health cost of smoking / packs of cigarettes smoked • Smoking costs = 6.5% of health expenditures, which were $1.9T in 2004 ($123B). That’s $410/person/yr, $1070/household/yr. • Average smoker smokes 16 cigs a day (NIH survey), about 1/5 of adults smoke (ditto), 1/5 of approx. 223M adults is 44.6M*16/20*365 = 13B packs of cigs a year. • Average health cost per pack of cigarettes = 123/13=$9.50/pack • Does not include second-hand smoke and other unknown impacts • Cigarettes are taxed at $1.01 per pack federally, $1.60 for PA in 2014 • $2.61 per pack overall • Who pays? Who should? • Who benefits from such a meager response? 12 Non-linear math, complex/abstract logic • All important to understand o Positive feedback loops: vicious cycles • Greenhouse effect and deforestation • Hansen: Higher CO2→higher temps→greater release of CO2 naturally from sea water→uh oh • Overfishing reduces competitors and predators to jellyfish o Jellyfish eat fish eggs and poison or swarm fish • Reducing competition to jellyfish o Critical mass or tipping point • A system reaches a point where its dynamic & impact changes fundamentally o Overpopulation o Arctic Sea Ice depletion o Exponentiation • Same principle as finance • Impact equation 13 World Population OMG OMG2 Today 14 Overpopulation • The rule of 70 o Global population increased by 29% 1990-2009 • From 1990, doubling would be expected in ≈ 47 yrs. • Carrying Capacity: how many humans can the earth support? o Difficult to estimate but a recent and generous estimate is 10B. o Pimentel & Giampetro: Sustainable US population should be 200M. • By 2006, humanity was using 40% more than what earth can regenerate (Ecological Footprint Atlas) 15 Problems associated with overpopulation • Inadequate fresh water • Depletion of resources, esp. fossil fuels • Increased pollutants o • • • • Prosperity decreases this problem Deforestation Atmospheric (GW) Arable land loss Species extinction o Food chain problems • Child mortality • Likelihood of epi- & pandemics • • • • • • Starvation, malnutrition Poverty/inflation Life expectancy Unhygienic living Crime Conflict over scarce resources • More restrictive laws • How many of these does business contribute to? 16 Oil depletion • Still finding new reserves, but: o More expensive & intrusive o Temptation to put off the problem o Increases CO2 emissions → global warming 17 Frack U(SA) 18 I’ll take Geography for $200, Alex • Trebek: This peculiar well-lit area is the only one that doesn’t correspond with a heavily-populated metro area. 19 Co2 Emissions: where do they come from? Our wasteline looks like our waistline. 20 CO2 emissions: how are they trending? 21 CO2 emissions: Why does it matter? 22 Other problems • Deforestation: http://www.youtube.com/watch?v=hllU9NEcJyg • Species extinction o If you don’t care about them, care about this: • Poverty & Hunger 23 Poverty & War 24 Water problems Economic water scarcity means not only is there little physical water present, but people can’t afford to obtain sufficient amounts. 2nd source: sitemaker.umich.edu 25 Global Warming The Biggest Problem and therefore The Greatest Business Opportunity Of the 21st century 26 Global Warming Presentation Overview • Basic Evidence for Warming o Arguments against warming • Evidence for Human Causes o Arguments against Human Causes • “Controversy” in society, media & leadership • Epistemology of the Human Causes argument o e·pis·te·mol·o·gy: the theory of knowledge, especially with regard to its methods, validity, and scope. Epistemology is the investigation of what distinguishes justified belief from opinion. • Key o GW=Global Warming o AGW=Anthropogenic (Human-Caused) Global Warming 27 Global Warming: Basic Evidence 28 Global Warming: Basic Evidence 2 • 347 consecutive months (Jan/2014) above pre-industrial average o Odds of no warming are 1 in 2^347 or • 287000000000000000000000000000000000000000000000000000000000000000000000000000 000000000000000000000000000 to 1 against. o 2016 Postscript: 26 more, so 2^347*2^26 or 2^373 o 2018 Postscript: 50 more, so 2^397 • Terms o GW = Global Warming o AGW = Anthropogenic (Human Caused) Global Warming • Time article o http://time.com/3656646/2014-hottest-year/ • Postscript: 2015 broke the record. • Post-postscript: 2016 broke that record. o 2018 Update: EACH of the 5 hottest years have occurred since 2010. • Probability = 5!/127! = 3.98e-212 that’s .000 (211 leading zeroes) before the 3.98. • If the odds of getting hit by a car tomorrow are 1 in a 1,000,000, this would be similar to the odds of getting hit by a car 35 consecutive days. o 2022 update: The warmest 7 years since recordkeeping began (c. 1880) have all been since 2015. 29 Common Anti-GW and Anti-AGW Claims • Anti-GW claim – no global warming o See previous evidence – clearly false • Anti-AGW claim o “There is no consensus on GW or its basis in human activity” • We’ll address that shortly o It’s a conspiracy/hoax • In terms of funding per output, the reverse is actually true o o http://www.theguardian.com/environment/2013/dec/20/conservative-groups-1bn-against-climate-change http://www.huffingtonpost.com/2015/04/07/science-funding_n_7020382.html • For funding per output to be equivalent, there would have be $2.2T in advocacy money spent o Journals won’t publish anti-AGW papers • Truth: Academic journals love counterintuitive findings.* It is true that they don’t love poorly designed/conducted research. o *Man bites dog > Dog bites man 30 The “no warming in last 17 years” argument • http://www.washingtonpost.com/news/energy-environment/wp/2015/03/24/ted-cruz-says-satellite-data-show-the-globe-isnt-warming-this-satellite-scientist-feelsotherwise/?tid=pm_business_pop_b • Gist of argument o Last 17 years show no warming trend • Problems with argument o Compares an anomalous data point to a long term trend • At least one of the following statements is true: o The argument is mathematically illiterate o The argument is disingenuous • Illusion disappears looking at 5-year moving average o Red line o 1998 an exceptionally hot El Nino • http://planetsave.com/2012/01/05/global-warming-trend-vs-global-warming-variation-cute-dog-video/ 31 Related argument: we’re cooling now • • • • Similar illogic as the 17-year argument Ignores known cyclical cooling effect of La Nina 2013-2014 not La Nina years 2017 was the hottest non-El Nino year in history 32 Digression into time series analysis • Y=T+C+S+I o Trend, cyclical, seasonal, irregular • Cyclical (sun spot cycle, El Nino, etc.) o Source of some cooling myths • Seasonal (weather) variation o Source of sea ice myth • Irregular (1998 etc.) o Seeing non-existent patterns o http://www.skepticalscience.com/graphics/ArcticEscalator500.gif • Trend o Natural T,C,S, and I are largely known o Current trend is HUGE relative to natural forces • But completely in line with trends in CO2 emissions o A known greenhouse gas • Couldn’t there be a HUGE unknown natural trend? o How science works: An important point (later slide) 33 More evidence • Exxon’s history and strategy o http://www.huffingtonpost.com/entry/oil-cover-up-climate_us_570e98bbe4b0ffa5937df6ce • 2015: Hottest year on record o https://www.ncdc.noaa.gov/sotc/global/201513 • New concerns that sea level rise happening faster than originally predicted o o o http://www.climatecentral.org/news/study-reveals-acceleration-of-sea-level-rise-20055 http://www.nytimes.com/2016/02/23/science/sea-level-rise-global-warming-climate-change.html?_r=0 http://www.climatecentral.org/news/us-with-10-feet-of-sea-level-rise-17428 o What most don’t realize about scientific method is its inherent conservatism • To minimize likelihood of false positives (Type I errors) 35 The Case for AGW AGW = Human-caused global warming 36 Why is this important • If global warming is not caused by people: o We either can’t control it, or maybe shouldn’t control it • If global warming is caused by people: o Human activity is accelerating such that the problem will only get worse unless we control it • And controlling it: o o o o Requires industry to self-regulate much more than they have shown they are willing/capable of Therefore, government regulation is probably needed, AND: We might need to cede some sovereignty to an international organization/treaty Also, a radical effort to change could impact the economy • Finally, there is tremendous skepticism from some on AGW 37 AGW (Human Causes): Let’s ask scientists • Approach 1 o Count all those who UNEQUIVOCALLY support AGW versus everyone else. o Result: • 97%-3% • Comment o Approach is very conservative as it lumps as many other positions as possible into 3% 38 Approach 2 • Count the articles that EXPLICITLY reject AGW as a proportion of all articles o Approach is less conservative than Approach 1 o Result: 2257 to 1 (articles), 9136 authors to 1 • • • http://www.popsci.com/article/science/infographic-scientists-who-doubt-human-caused-climate-change This is not a debate. This is not general consensus. This is UNANIMITY. Also, regarding moral integrity, note that most neutral and pro-AGW sources cite the more conservative finding on the previous slide, even though this one is just as valid 39 Gap between experts and US public • 2008 Gallup poll cited earlier o Note how, as respondents are more proximal, more informed, more expert in climatology, survey response “Yes” to AGW increases • Why is public so skeptical? o Media o Political polarization and ideological faultlines 40 The False Equivalence Problem • How the media handles the Global Warming so-called “controversy” o Nerdy science guy against spiffy PR guy • Implication: Truth must be halfway in between positions Ice core samples, meteorological observation, historical records… Did you see how much it snowed this winter? Check and mate! • https://www.youtube.com/watch?v=cjuGCJJUGsg 41 The leadership problem • Which guy knows more about global warming, the Columbia University climate professor on the left, or the snowball-throwing senator on the right? • Which one currently chairs the Environment and Public Works committee? o What is really going on here? One possibility: o https://www.youtube.com/watch?v=gZEdDMQZaCU 42 Perspective on theory and science • The Scientific Method o Scientists develop theory1, which is basically a statement based on logic or previous evidence and experience, about how X causes Y o A theory must be testable/falsifiable o Studies test theories • Evidence from a study confirms or refutes the theory o Over time • Studies, evidence, findings accumulate • Theory either becomes accepted, or o A new theory emerges that purports to better explain logic/evidence • Q: How do we decide whether evidence confirms or refutes a theoretical X→Y claim? 1 A big part of the problem is that the word “theory” means something different to laypeople than academics 43 Validity of scientific causal claims • Hypothesis: Humans are causing global warming. o Challenge 1: Prove the association • Global warming must exist • There must be a human cause that correlates with the warming trend (CO2, methane & other greenhouse emissions) o Challenge 2: Temporal precedence • Must show that increased emissions occur before global warming (subsequent slide) o Challenge 3: Rule out other explanations • All other explanations known to date could not have caused this much warming this quickly • All unknown explanations would have to be of such magnitude it is not plausible that they would still be unknown • AGW critics have yet to put forth an alternative explanation that meets these challenges, successfully refutes AGW, or explains the totality of data effectively 44 Longer trend We know about past climates because of evidence left in tree rings, layers of ice in glaciers, ocean sediments, coral reefs, and layers of sedimentary rocks. For example, bubbles of air in glacial ice trap tiny samples of Earth’s atmosphere, giving scientists a history of greenhouse gases that stretches back more than 800,000 years. The chemical make-up of the ice provides clues to the average global temperature. 45 Man-made vs. natural causes 46 Source: Skeptical Science • Multiple studies, compare equivalent colors to find individual results • Natural forces, overall, are neutral to even slightly cooling o Thus, human caused can be >100% 47 1 & 2) Association, Temporal precedence Hmm, there might be a connection here… 48 3) Alternative Explanations: which one fits? No known natural cause of global climate change is consistent with the data, but human causes correlate nearly perfectly. 49 3) Alternative explanations: why none proposed? • Basic principle of science and knowledge o Larger & easier to measure/detect effects/phenomena are easier to detect/understand than smaller ones • Why we discovered gravity before black holes • Example: Which radio station will be easier to pick up on your radio? o Any natural cause for warming of this magnitude1 would have been EASILY identified by now. Strong signal Weak signal 1: Magnitude means size and rapidity of effect 50 Summation & next steps • Global Warming exists • Global Warming is largely caused by human activity • Question o What should we do about it? o Costs, benefits, risks, ethics come into play here o Type I error • Global warming does not exist and we spend $$$ on it • Inefficient use of $$$ but get large gains from sustainability • Problem with argument: False premise (it does exist and is caused by humans) o Lesser Type 1 error is possible (human cause is 75%, not 100% of warming, e.g.) o Type II error • Global warming does exist and we avoid action • Loss of land, resources, global conflict, economic depression, loss of life o Q isn’t really do nothing vs. action but rather how prudent and what type/magnitude of action should we take o Also question of governance in light of global problem 51 Big Business Working on Climate Science – Jeff Nesbit • “Nearly every large multinational corporation (even big oil companies such as Exxon Mobil, Shell, Chevron, and BP) now accepts climate change science on its face. The only holdouts are coal companies that stand to lose most in a global energy transformation in the next 20 years, and private companies like Koch Industries that rely on the fossil fuel economy.” o Source: http://www.usnews.com/news/blogs/at-the-edge/2014/08/05/wal-mart-ibm-and-coke-amongcompanies-addressing-climate-change o Jeff Nesbit was the National Science Foundation’s director of legislative and public affairs in the Bush and Obama administrations; former Vice President Dan Quayle’s communications director 52 Future projections Even if greenhouse gas concentrations stabilized today, the planet would continue to warm by about 0.6°C over the next century. Most experts are concerned that at 4o C, ecosystems may begin to completely collapse. No way to know because change is so dramatic & rapid compared to historical record. 53 Understanding non-linear math: IPAT • Sustainability impact conceptual equation: o Impact = Population * Affluence * Technology o Hold technology constant for a moment • Global population’s current increase rate is 1.2% per year • If we assume affluence (economic prosperity) also increases at 1.2% per year • Then in 50 years: o P = 1.012^50 = 1.82 o A = 1.012^50 = 1.82 o I = 1.82^2= 3.31 o That’s 3.31 TIMES the current obviously problematic impact. IN YOUR LIFETIME. 54 The Role of Business • • • • • • Contributes to many ills Externalities (privatized gain, socialized loss) Has resources & expertise to help Sustainability pays for itself (Orlitzky et al.) Good financial move, especially LT Fiscal sense o Risk/uncertainty reduction o Prevention vs. cure • Sustainability as 21st century’s great economic opportunity? vs. What it means for the candidates on the Republican side, is if you ... buy into green energy or you play footsie on this issue, you do so at your political peril. ... And that's our influence. Groups like Americans for Prosperity have done it.” Tim Phillips, Americans for Prosperity President 55 Population clock? 56 Back to Savitz The Role of Business brings us back to Savitz’ book Chapters 2-5 highlights 57 Savitz: The Age of Sustainability  Factors (beyond physical/natural environment): Stakeholder Proximity & Influence  Note: I think some of these from ch3 are nearredundant so I’m re-organizing them:  Empowerment:  Freedom & democracy empowers individuals who begin to question status quo  Empowered employees, customers, investors who question  Activism/empowered stakeholders & “voting with feet”  Networked world:  More news gets out, and more quickly  Activists form/build networks more effectively/efficiently  Interdependence:  Socially conscious world:  More concern over stakeholders, justice, environment, etc.  Corporate power  , governmental power   In many cases, firms are the only entity with the power and skills to do anything  An imperiled world (the focus tonight) 58 Savitz: Corporate Accountability in the Age of Sustainability 1950s: Make money Provide Philanthropy 1970s: Make money Provide Philanthropy Protect environment Safeguard products 2010s: Make money Provide Philanthropy Protect environment Safeguard products Promote diversity Improve communities Protect workers Prevent child labor Foster public health Ensure human rights Alleviate poverty Provide technology Protect privacy Oppose corrupt regimes Patrol supply chain Engage stakeholders Measure & report Continuously improve 59 Step 1: The Sustainable Sweet Spot • As Savitz states, sustainability is hard, but o Savitz also states its easy (sweet spot) o Step 1: • Identify the “low hanging fruit” or “heavy half” (80/20) solution • Ask, where are the ‘no-brainer’ opportunities for sustainability? • Which societal interests are easily and demonstrably justified as serving business’ interests? Business Interests Sweet Spot Societal Interests Sweet Spot: License to Operate Efficiency Gains Business Growth Innovation Inspiration 60 Savitz: Business’ Response • Resistance o Oppositional cultures • Oppositional framework: Identity based, siege mentality, all those who oppose us MUST be wrong about EVERYTHING o Short term profit pressures • Only the sweetest of sweet spots immune o Unwillingness of customers to pay • 2 criticisms of Savitz: o Untrue, customers will pay a SMALL premium on average o Customers are not a unitary “they”. Some will pay no premium, some will pay small, some will pay significant. o Cynical response (greenwashing) 61 Savitz: Cynics (left wing) • Corporate claims are hype/greenwashing, or efforts to fend off government. • Business can’t self-regulate, problems already too serious to entrust to business, etc. o Response: Such criticisms are not entirely false but largely overstated (and defeatist) • Business is making some progress o Progress could be faster, of course 62 Savitz: Skeptics (right wing) • Profitability, not responsibility, is business’ business o Response: Even most believers only selectively believe that • (ask a free marketer whether they’d buy from a firm that employed 10-year-old girls working under deplorable conditions, e.g.) o Profit maximization is NOT a LEGAL obligation o Sustainability is more than responsibility, it is also opportunity o Evidence is that responsibility and sustainability help long-term profits • These issues fall under government’s purview o Business may be better equipped • Don’t free markets fully cost products o No, they just don’t. Examples: cigarettes, gasoline. • Fad leading to impoverishment in developing world? o This has been a question in many RSJ news groups (e.g., should we just stop doing business with international sweatshops) • If world adopted American-style resource consumption ≈ 30B souls • Enlightened self-interest is the way to go o People are not rational (behavioral business theory demonstrates this) o Adam Smith, Theory of Moral Sentiments • The wise (enlightened) man sacrifices self-interest for common good • Sustainability is rigid ideology o We can’t even agree on how to define/operationalize it yet! o Goal is not merely to save souls but to move towards a better world and help business do this for mutual benefit 63 Videos & Reference • Business case: Willard o http://www.youtube.com/watch?v=TWOVY1Q_otA • Business logic (argument for) o https://www.ted.com/talks/ray_anderson_on_the_business_logic_of_sustainability • Sustainability lecture o http://www.youtube.com/watch?v=2s4NXcfkmPI • Roberts on AGW impact o https://www.youtube.com/watch?v=A7ktYbVwr90 • Other materials o http://climate.nasa.gov/evidence/ o https://www.ncdc.noaa.gov/monitoring-references/faq/global-warming.php • Corporations and global warming o http://www.usnews.com/news/blogs/at-the-edge/2014/08/05/wal-mart-ibm-and-coke-among-companiesaddressing-climate-change 64 MGT 501 Responsibility, Sustainability, Justice 6. Ethics: The Business Case or Ethics Pays, and how Dr. Robert C. Giambatista, PhD 1 Basis of Business Case • Meta-analyses & literature reviews o Study of studies asking “does ethics pay” directly • We’ll look at Orlitsky et al in a few weeks in a related study • OB/HR research: Previous “Best Practices” module o Solid HR/Leadership practices are BOTH good business and good ethics • Improve both individual (employee) and organizational performance • Consideration of “residual benefits” o Logic: We know ethics provides intangible and hard-to-quantify benefits that have at least SOME economic value o Thus: If research found that ethics did NOT relate to performance at all, then it still probably has a hard-to-detect, small positive effect o PLUS: It’s doing right at no net cost 2 General Model “Good” management, HR, leadership practice Theme of Module 5: Best Practices Good Business Ethics Mainstream OB/HR research findings Business Processes & Intermediate Outcomes Economic Performance Stakeholder Satisfaction & Motivation, esp. Three italicized processes are really indisputable. HR management is based on principles of fairness & justice (also correlated to performance). Finally, literature on trust, reciprocity, 3 fairness also proves out. All based on proven empirical research in management. Revealed Ethics: RE Berrone et al. Stakeholder Satisfaction: SS Financial Performance: FP Applied Ethics: AE • Revealed Ethics: Public statements about ethics, e.g., codes – “talk” • Applied ethics: Actual conduct and practice regarding ethics – “walk” • Findings: o RE correlates to FP but those who had ONLY RE and not BOTH RE & AE did not show FP gains o AE increases SS which increases FP, AE acts through SS (“mediation”) o Also, RE & AE work jointly to increase FP • Translation: o Talk without walk = no FP gain o FP gains hinge on SS, which is especially facilitated by AE 4 Margolis et al. • Does ethics pay? Yes! o Social trends, expectations o Situations that demand response • Evidence o Abundant case evidence – doing right paid off, doing wrong did not • Not the same, however, as statistical evidence • “Boxscore” Literature Review of 80 studies o Social performance → Financial Performance • 43 (53%) yes, 19 (24%) none identified, 3 (4%) negative, 15 (19%) mixed. • In other words 77 of 80, at minimum, found no overall HARM o To skeptics: would ANYONE claim that if ethics DOESN’T hurt the bottom line, we SHOULDN’T be ethical? • Goodwill, stakeholders, happier workers, “intangible” benefits to all • Obviously, the above find their way to the bottom line indirectly 6 How Exhibit 2 should look Prescription: Behave ethically Prescription: Not worth it 1 95 Red: Study showed negative relationship; ethics bad for business. Yellow: Study showed mixed relationship; ethics good for business because some good occurs and positive and negative financial effects tend to offset. See note for caveat Clear: Study showed no relationship; ethics good business because some good occurs with no net financial harm. Green: Study showed positive relationship; ethics good. Caveat: Should confirm by comparing your firm’s mission & strategy to the different source studies’ assumptions and design decisions 7 Margolis continued • Financial Performance → Social Performance o Not as important, but if you believe they should mutually reinforce each other it matters • Similar findings (19 studies, 13 +, 3 no, 3 mixed, 0 negative) • Higher FP means more resources o Good to know though that higher FP are not stingy • KLD index http://www.msci.com/products/indices/esg/methodology.html • http://www.msci.com/resources/factsheets/MSCI_ESG_IVA.pdf o We may come back to this, closely related to 3BL o Evaluates company performance on: • Community, diversity, employee relations, natural environment, product safety and quality • Different measures: o KLD, Fortune Most Admired o “Certainly, some scholars applaud the multiple methods, measures, and data sources that have been utilized in assessing corporate social performance. This variety is seen as capturing the diversity of corporate practices that constitute social performance. Critics see it in the opposite way, as an indication that corporate social performance is an incoherent jumble of practices.” o Which set of scholarly arguments do you agree with? Hint: Exhibits 3 & 4. 8 Margolis conclusions • 1: Social (ethical) performance → financial performance • 2: Evaluating ethical performance solely on financial performance ignores other benefits and beneficiaries o Including employee morale, benefits to community & society, innovation, reputation o NO effect to FP is a POSITIVE effect for the world (do good, create no financial harm = net positive) • 3: Issue is resolved; now it’s “how can mangers be equipped to meet rising expectations?” o 1. What are our organization’s objectives, duties and concerns? In other words, what do we stand for and want to accomplish? o 2. How is our organization best able to accomplish its ethical and financial objectives? o 3. How should our organization respond and act (toward social/ ethical issues) when the two sets of objectives are in tension? 9 Why does ethics pay? Macro perspective o Goodwill & reputation has economic value, and is probably undervalued o Many customers and some investors consider a firm’s ethical reputation in choice-making • Thought experiment: What proportion of customers SHY AWAY from shady firms? What proportion are ATTRACTED to such firms? o Ethical firms benefit from better relationships inside and outside business • Customer/stakeholder acquisition & retention o Risk avoidance: • Poor ethics increases risk of insolvency if exposed • Ditto major lawsuits and fines o These can have snowball effects on future business • Which is probably a bigger problem than suits, fines themselves (scarlet letter) • http://money.cnn.com/2018/03/19/news/companies/united-airlines-oscarmunoz/index.html 10 Why does ethics pay? Micro Perspective o Micro = inside firm, OB/HR emphasis o Ethics builds trust, which is efficient and effective o Builds loyalty and commitment • • • • Motivation and performance of workers Reduced turnover Increased organizational citizenship behaviors All of above highly correlated to desirable outcomes o Employee job satisfaction • Correlated to motivation, performance, behavior, and health o Ethics as one indicator of “good management” generally • Good management increases ethics, and vice versa o Ethical practices/leadership also increase: GM • Employee empowerment, creativity, innovation, etc. o All of which have been correlated to performance o Still skeptical? • I could provide you a list of 500+ OB/HR articles to read by next week E FP 11 Over time, who likely leaves/stays? • Assume 2 dimensions, 2 types per dimension, of employees o Marketable (M) and Unmarketable (UM) o Ethical (E) and Unethical (UE) • Assume 2 types of firms, ethical/responsible and not, over two time periods • Q: What does T2 look like for each? T1: All firms M T2: Ethical Firms T2: Unethical Firms M UE E E UM UM UM M UE UE E 12 Improving Personal & Group Performance Ethically Summation of concepts to date 13 Reflections on Dilemmas • Always consider 3rd ways out o Dilemma is a bad word, and only an uncreative mind can’t perceive other possibilities • Time, process, and colleagues are your allies – keep the game alive. • Big learning for me: o Look outside dilemma to organizational and related causes, structural, policy, culture, etc. • Even as trapped in a current dilemma, strategize to change the firm, find allies. o If current “dilemma” can’t be avoided, change the conditions that make such dilemmas inevitable. 14 Reflections on Psy/Soc module • How to manage these factors that enable unethical behavior o Awareness is a good first step • Name the processes that might be going on, but do it with dignity o o o o Participative, servant, and ethical leadership Psychological safety in teams Reward systems that reward/don’t punish ethics Avoid direct confrontation • Ex: If someone is in denial or resisting, don’t call him/her out but discuss the issue and the stress involved with it. Give them a legit way out. o Group tricks: break the spell • Tips to prevent groupthink o Also avoid the causes • Conformity / Obedience (Milgram/Asch) o Search for 1 person who agrees with you o Communicate outside face-to-face environments o Question authority, even if you can’t verbalize the question 15 Individual tools • Other-centeredness, empathy, perspective-taking, and collaboration (win-win) as strategy and habit o All classic OB concepts that fit Golden Rule • Learn more about cognitive & perceptual biases and think about how they might affect you • Proactively search for disconfirming information and weight it evenly • Re-frame, re-word dilemma, see if perception changes • Read literature on defense mechanisms, move to more mature mechanisms • Keep antennae up for justifications/hazard signs • Find ways to manage stressfulness of situations o Buy time, extend process, find allies 16 Reflections on Frameworks module • The quick tests (borrowed from 505) can be helpful for smaller problems o Also can be extra criteria in addition to utilitarianism and deontology in full model • Remember the main framework is intended to be complete: o o o o Stakeholder analysis Rational problem solving Emphasis on creative solutions Pre-eminence of universal principles as decision criteria • Can use Collins, Kohlberg, Byron, even quick test o Iteration and “closing the loop” until solution is identified • Try the app as well: Ethical Decision Making 17 Ethical Navigation: Conclusion • To what extent is corporate policy, structure, culture, and politics contributing to this situation? o Who are some powerful people with principles here? o How can I turn the above into allies? (Politics are fickle, policy is malleable, and large firms often have sub- and even counter-cultures) • • • • How can I use time and process to my advantage? How can I avoid binary thinking? How can I make a difference without martyring myself? How can I find and argue for evidence of: o + consequences of doing right o - consequences of doing wrong • Can I think of stakeholders who might be helped, or whose interests will help brainstorming? • Remember “Small Wins” from 505 o Making the/your world a bit better every time • Always ground choices in ethical principles 18 MGT 501 Responsibility, Sustainability, Justice 6. Ethics: The Business Case or Ethics Pays, and how Dr. Robert C. Giambatista, PhD 1 Orlitzky • This is a major, complex academic research piece • Be honest: o Tell me what you were confused about, what didn’t make sense • We’ll talk about it, I’ll help interpret the article o Give me your general impressions about the article • What did you think the article’s thesis was? • What do you think about the article’s thesis and evidence for it? • Other/general thoughts? Business Case for CSR • The articles we reviewed for Ethics Business Case typically operationalize Ethics as CSR, so the same arguments and findings apply here. • Orlitzky et al. primer: o Mediating effect x→y→z • Y mediates (comes between) x & z in a causal chain of events o Example: Ethical leadership → stakeholder orientation → innovation o Bidirectional causality x Y • We might call this a virtuous (or vicious) cycle o Example: CSR → organizational performance → resources for more CSR initiatives o Moderating effect • A relationship between x & y varies as a function of M. o Example: Industry type might moderate the relationship between CSR and effectiveness. o Don’t worry about H4 (methodology-focused) • Requires doctoral education in research methodology o 52 studies. 388 findings. 33,878 observations. • Each observation is a firm, probably for a financial year Orlitzky: Main arguments • Definitions o CSP = Corporate Social Performance (how well does firm embody/practice CSR, ethics, environment, etc.) o CFP=Corporate Financial Performance • H1: CSP→CFP (Similar to Berrone): Social performance (responsible firms) satisfy stakeholders, which is instrumental to financial performance • • o Good stakeholder management increases effective adaptation to external demands. Responsible firms develop fair, rational ways of assessing stakeholder claims (including investors) Aka ‘Good management’ theory • H2: CFP→CSP Healthy firms have slack resources to expend on CSP • Note “virtuous cycle” Orlitzky: H3 & H4 1. H3: Mediators (X→M→Y) a) b) CSP→competencies, knowledge (see above)→CFP CSP→reputation→CFP 2. H4: Moderators (X→Y depends on Z) • CSP→CFP is robust across wide array of how CSP and CFP are measured across studies • • In other words, you will find the positive relationship no matter how you study it!!! 4 CSP measures: • • • • • Disclosure (annual reports, letters to shareholders, etc.) Reputation (3rd party reputational ratings of social performance) Social audits (3rd party analyses of behaviors/programs) Values & Attitudes (surveys of corporate culture relevant to CSR) 3 CFP measures: • • • Market based (financial/investment) Accounting based (internal efficiency, e.g.) Perceptual (survey measures) Orlitzky et al. CSP • Measurement strategy CFP 13% shared variance o A moderator, also a strength of this study and CSR literature • If findings are robust across strategies, strengthens argument • Findings (mean true scores) o CSP & CFP r = .36 (.36482=.13, n=388 findings spanning 33,878 observations1) • Moderate positive effect o CEP & CFP r = .12 (.12462=.02, n=139 findings spanning 9,823 observations) • Small positive effect o File drawer analysis • Non-findings often don’t find their way to publication, unknown how many of these there could be. • This tells us how many there would have to be in order to jeopardize the primary findings o If the number is 10 or 20, it’s a problem. It’s 1037. No problem; not remotely plausible. Orlitzky cont’d • Virtuous cycle (H2) o Findings similar whether CSP→CFP or CFP→CSP studied, supporting the cycle concept • Learning/Competencies (H3a) and Reputation (H3b) o Both supported, r=.33 and r=.49, respectively • A. CSR → managerial competencies → organizational performance, AND: • B. CSR → reputation → organizational performance • Measurement strategy (H4) o Findings do vary as a function of how CSP, CFP are measured • BUT, the findings are robustly positive, which STRENGTHENS the CSP→CFP argument (no matter how CFP is measured, it’s a positive relationship) More on H4 • Strongest, if most abstract, point of study. o Anyone critiquing “bias” is (knowingly or not) saying the METHODS are biased. H4 PROVES this not to be true: o Lowest method is disclosure, but that’s just empty reporting and isn’t backed up by action. • Rebuts cynics regardless – investors don’t respond (much) to mere disclosure/statements (accountants are harder to fool than investors?) o Toughest measures are audit and culture/acctg, all measures positive (green numbers). o If anything, investors undervalue true relationship (compare the 2 blue numbers to each other) CFP CSP➔ Overall Disclosure Reputation Audit Culture Overall .36 .09 .73 .18 .21 Market .15 .11 .71 .04 No data Acctg .42 -.02 .61 .26 .15 Percept .89 No data .95 .15 .59 Orlitzky conclusions • Rejects the Friedman (anti-CSR) argument #1 • Friedman and libertarians may be right in that: o CSP implies Government regulation may not be necessary • Q: Does it appear to you that businesses sufficiently self-regulate with respect to environment, marketing, labor, etc.? o Effective management can and should increase CSP to increase CFP proactively • One problem is getting individuals to believe the finding o Go back to mod 4: Denialism, Dissonance, Resistance to change, etc. o Finding is not really subject to “That’s their opinion”, etc. • Future recommendations; managerial implications o o o o o o Focus on social and environmental outcomes Refine concept of stakeholder Market forces do NOT punish CSP Use CSP as a reputational lever Integrate market and non-market strategies Use CSP unilaterally to reduce gov’t regulation Summation -1 0 .36 Negative relationship CSP → - CFP No relationship1 Positive relationship CSP → +CFP Do not solve social problems (and let society crumble?) or solve through other means and institutions (assumes a wellfunctioning government) Engage in CSP – benefits and costs offset, no Fin harm and some Soc good Engage in CSP – it helps the bottom line. 1 Note on file drawer problem, 0 and negative relationships +1 Examples of Best Practice This is not an exhaustive set, just enough to provide a flavor 11 GRI: Background • UN, NGOs initiative • Framework for developing & reporting metrics • Allows for o o o o o Accountability, visibility Continuous improvement Competitive advantage Common understanding of metrics Legitimization of CSR practice domains • Firms still have to determine strategies & initiatives o GRI is more of a scorekeeping tool 12 GRI Preview: Snapshot of coverage 13 Labor Practices and Decent Work • SAS Institute: on-site day care, 35 hour work weeks, rec center, life counseling services, summer camp for kids, on-site cafeteria/café. Unlimited sick days. o Turnover rate is 3-5% vs. 20-25% in software industry • Training and Development (source: udemy.com) o Getty Images: WeLearn Wednesdays - sharing recommended online courses through internal social media platform. o ITX: individual development plans for employees with online courses, communication channels to share which courses/instructors they recommend o Prosper: Creating a culture of learning, extending to personal development • Diversity – various examples o https://www.aperianglobal.com/leaders-diversity-inclusion-5-lessons-top-globalcompanies/ • Supplier assessment o Following the Foxconn fiasco, Apple amped up its engagement with suppliers, supplier standards documentation, audit visits, etc. 14 Human Rights • Starbucks is well-known for supporting farmers and ethical sourcing o https://www.starbucks.com/responsibility/community/farmer-support • Mars has committed to eradication of child/forced labor, a huge problem in the cocoa industry o https://www.washingtonpost.com/graphics/2019/business/hersheynestle-mars-chocolate-child-labor-west-africa/ 15 Society • Local communities o Pepsi – see Kerala example in Savitz text. • Anti-corruption o JCM Capital refusing to “play the game” • https://www.tradecommissioner.gc.ca/canadexport/0000706.aspx?lang=eng • Public policy o Some companies increase climate action even as government policies regress (c. 2019) • https://www.washingtonpost.com/climate-environment/2019/09/24/some-corporations-step-upclimate-action-government-policies-stall/ o Others urged US government to stay in Paris Agreement • https://www.c2es.org/press-release/major-companies-urge-white-house-to-stay-in-paris-agreement/ 16 Product Responsibility • Customer Health & Safety o J&J and the Tylenol crisis (see Wikipedia for details) • Marketing Communication o Everlane & “radical transparency” • https://www.wordstream.com/blog/ws/2017/09/20/ethical-marketing o This website has other examples of ethical marketing • And, yes, being responsible pays: o https://www.foodqualityandsafety.com/article/15244/ 17 Details on 3BL/GRI metrics These go into great detail regarding key definitions They should help you visualize some of the issues, concerns intended by the standards Use these slides as a reference and to brainstorm some potential issues, concerns, strategies, etc. It is not necessary to ”study” these slides as if there was a test on them, they are just a reference to help spur creativity and application. 18 GRI Preview: Snapshot of coverage 19 General format of detailed slides • Elaboration of selected specific metrics • Comment on the metric • Examples of issues/concerns that metric tracking helps inform 20 Sub-Category I: Labor Practices & Decent Work • Aspects o o o o o o o o Employment Labor/Management Relations Occupational Health and Safety Training & Education Diversity and Equal Opportunity Equal Remuneration for Women & Men Supplier assessment for Labor Practices Labor Practices Grievance Mechanisms 21 Employment • Total number and rates of new employee hires and employee turnover by age group, gender, and region o Note the biodata breakdowns. Hiring & turnover have their own implications (high turnover indicates management problems, e.g.) but differential rates for these also point to fairness issues • Benefits provided to full-time employees that are not provided to temp or part-timers, by locations o The GRI is mainly concerned with how well full-time employees are treated • However, it can also indicate if a firm is particularly exploitative regarding other workers o Example: A firm cuts back on FT employees in favor of PTs so it doesn’t have to provide health benefits • Return to work and retention rates after parental leave, by gender o Are firms providing fair opportunities to women after their leave? o Are firms providing any opportunities for men to take leave? 22 Labor/Management Relations • Minimum notice periods regarding operational changes, including whether they are specified in collective agreements o How much advance notice: so employees can consider other opportunities fairly o What consultative & negotiation practices exist to empower workers when changes are going to occur 23 Occupational Health & Safety (OHS) • Percentage of total workforce represented in formal health/safety committees that monitor/advise OHS o What level of involvement/commitment/engagement exists • Injury types/rates, disease, lost days, fatalities, absenteeism overall, by region and gender o These provide base data that reflect good/bad practice • Workers with high incidence or high risk of diseases related to their occupation o These help identify occupations that need attention/modification • OHS in formal agreements with unions o Degree of specification, formalization of OHS practice, equipment, training, monitoring, rights, etc. 24 Training & Education • Average hours of training per year per employee by gender and employee category o Level of commitment to developing employees, fairness for men/women, and different types of workers • Programs for skills management and lifelong learning that support the continued employability of employees and assist them in managing career endings o Beyond training – which is usually specific, technical skills, what is the firm doing to help people become better professionals and grow, and also deal with the future/retirement? • Percentage of employees receiving regular performance and career development reviews, by gender and employee category o Is the firm providing sufficient/appropriate feedback and is this robust for men/women/job types? 25 Diversity & Equal Opportunity • Composition of governance bodies and breakdown of employees per employee category according to gender, age group, minority group membership, other diversity indicators o What sort of governance/oversight is formalized into the organizational structure regarding diversity? o Are there patterns of employment across various diversity factors that reflect potential problems/discrimination? 26 Equal Remuneration for Women & Men • Ratio of basic salary and remuneration of women to men by employee category, by significant locations of operation o Are there any indicators of wage discrimination by job type and location? o Remuneration is synonymous with overall compensation (includes benefits, etc.) 27 Supplier Assessment for Labor Practices • Percentage of new suppliers that were screened using labor practices criteria o Was due diligence followed in assessing the suppliers’ labor practices for things like: • Employment practices, health/safety, discrimination/harassment, industrial relations, wages/compensation, working hours • Significant actual/potential negative impacts for labor practices in the supply chain o This one is a bit more abstract, goal is to communicate awareness of real or potential problems and to assess vs. expectations 28 Labor Practices Grievance Mechanisms • Number of grievances about labor practices filed, addressed, and resolved through formal mechanisms o Provides accountability regarding the integrity and legitimacy of grievance processes 29 Sub-Category II: Human Rights • • • • • • • • • • Investment Non-discrimination Freedom of Association & Collective Bargaining Child Labor Forced or Compulsory Labor Security Practices Indigenous Rights Assessment Supplier Human Rights Assessment Human Rights Grievance Mechanisms 30 Investment • Total number/% of significant investment agreements and contracts that include human rights clauses or that underwent human rights screening o How well are human rights considerations integrated into a firm’s economic decisions? • Total hours of employee training on human rights policies or procedures concerning aspects of human rights that are relevant to operations, including the percentage of employees trained o How thoroughly are such policies/procedures integrated into the firm’s practice evidenced through training? 31 Non-discrimination • Total number of incidents of discrimination and corrective actions taken o Report number and status/actions • Review process, remediations made, incidents resolved 32 Freedom of Association and Collective Bargaining • Operations and suppliers identified in which the right to exercise freedom of association and collective bargaining may be violated or at significant risk, and measures taken to support these rights o Goal is to reveal actions firms have taken to reveal whether opportunities exist for workers to exercise their rights to freedom of association and collective bargaining, and across its range of operations. 33 Child Labor • Operations and suppliers identified as having significant risk for incidents of child labor, and measures taken to contribute to the effective abolition of child labor o Also covers young workers exposed to hazardous work o Goal is to make this transparent to incentivize abolition of child labor generally 34 Forced or Compulsory Labor • Operations and suppliers identified as having significant risk for incidents of forced or compulsory labor, and measures to contribute to the elimination of all forms of forced or compulsory labor o Similar to child labor in its intent – make this transparent to move the practice to its abolition o Also focuses on types of operations and suppliers, as well as geographic areas that might be at risk 35 Security Practices • Percentage of security personnel trained in the organization’s human rights policies or procedures that are relevant to operations o Goal here seems to be to ensure human use (or non-use) of excessive force by security personnel 36 Indigenous Rights • Total number of incidents of violations involving rights of indigenous peoples and actions taken o Reporting includes the incident, how remediated/resolved, etc. o Goal is to protect indigenous rights by making such incidents and process transparent 37 Assessment • Total number and percentage of operations that have been subject to human rights reviews or impact assessments o How extensive is the firm’s processing of human rights considerations, how is it integrated into firm’s management processes, etc. 38 Supplier Human Rights Assessment • Percentage of new suppliers that were screened using human rights criteria o Points to the rigor used for supplier screening in this area • Significant actual and potential negative human rights impacts in the supply chain and actions taken o Informs stakeholders about an organization’s awareness of significant actual and potential negative human rights impacts in the supply chain. 39 Human Rights Grievance Mechanisms • Number of grievances about human rights impacts filed, addressed, and resolved through formal grievance mechanisms o Gives evidence to the seriousness, legitimacy, integrity, etc. of both human rights and how grievances arising from these are effectively managed 40 Sub-Category III: Society • • • • • • • Local Communities Anti-corruption Public Policy Anti-competitive behavior Compliance Supplier Assessment for Impacts on Society Grievance Mechanisms for Impacts on Society 41 Local Communities • Percentage of operations with implemented local community engagement, impact assessments, and development programs o Thorough reporting of local engagement efforts & programs and their assessment • Operations with significant actual or potential negative impacts on local communities o Informs stakeholders of an organization’s awareness of its impacts on local communities 42 Anti-Corruption • Total number and percentage of operations assessed for risks related to corruption and the significant risks identified o How extensive is the firm’s risk assessment, awareness of possible exposure risks? • Communication and training on anti-corruption policies and procedures o What is the firm doing to educate its strategy for preventing corruption? • Confirmed incidents of corruption and actions taken o Did the firm experience corruption and what did it do about it? 43 Public Policy • Total value of political contributions by country and recipient/beneficiary o Hopefully this one speaks for itself – the key again is transparency, thus making the firm accountable to stakeholders 44 Anti-competitive behavior • Total number of legal actions for anti-competitive behavior, anti-trust, and monopoly practices and their outcomes o Again, somewhat self-explanatory, is the firm being charged such conduct and what happened as a result? 45 Compliance • Monetary value of significant fines and total number of nonmonetary sanctions for non-compliance with laws and regulations o Provides one datum for all such fines, etc. 46 Supplier Assessment for Impacts on Society • Percentage of new suppliers that were screened using criteria for impacts on society o Encourages the firm to develop a screening process that considers social impact/responsibility of suppliers, and to implement it consistently • Significant actual and potential negative impacts on society in the supply chain and actions taken o What damage hath our suppliers wrought and what have we done about it? o The “potential” piece makes transparent efforts to identify & prevent future impacts 47 Grievance Mechanisms for Impacts on Society • Number of grievances about impacts on society filed, addressed, and resolved through formal grievance mechanisms o What processes do we have in place for managing grievances? What are the outcomes? o How many grievances are there? 48 Sub-Category IV: Product Responsibility • • • • • Customer Health & Safety Product and Service Labeling Marketing Communications Customer Privacy Compliance 49 Customer Health and Safety • Percentage of significant product and service categories for which health and safety impacts are assessed for improvement o Scope of efforts to manage and assess health and safety impacts • Total number of incidents of non-compliance with regulations and voluntary codes concerning the health and safety impacts of products and services during their life cycle, by type of outcomes o Outcomes could be fines/penalties, warnings, or simply deviance from voluntary codes o Somewhat self-evident what this is getting at 50 Product/Service Labeling • Type of product and service information required by the organization’s procedures for product and service information and labeling, and percentage of significant product and service categories subject to such information requirements o How extensive are internal requirements on labeling? • Total number of incidents of non-compliance with regulations and voluntary codes concerning product and service information and labeling, by type of outcomes o Are we in compliance with the law as well as our own standards? • Results of surveys measuring customer satisfaction o For the whole organization, major product/service categories, and at major locations of operation 51 Marketing Communications • Sale of banned or disputed products o Also reports organizational responses to these o Disputed means there are stakeholder questions/debate • Total number of incidents of non-compliance with regulations and voluntary codes concerning marketing communications, including advertising, promotion, and sponsorship, by type of outcomes o Hopefully by now you’re seeing patterns, several measures across the 3BL deal with number of non-compliance incidents and how they are resolved 52 Customer Privacy • Total number of substantiated complaints regarding breaches of customer privacy and losses of customer data o Non- compliance indicates either inadequate internal management systems and procedures or ineffective implementation regarding customer privacy. 53 Compliance • Monetary value of significant fines for non-compliance with laws and regulations concerning the provision and use of products and services 54 MGT 501 Responsibility, Sustainability, Justice 5. Ethics: Best Practices or Ethical Leadership of Human Resources Dr. Robert C. Giambatista, PhD 1 Where we are in semester • To this point, we have mainly focused on individual actors and what they can/should do to be ethical • Shift now, decisively, to organizational level o Will fan out from internal to external stakeholders [6-12] Organizational Level: External Stakeholders CSR & Sustainability [5-6] Organizational Level: Internal Stakeholders HR Practices Ethical Leadership [1-4] Personal, Individual Level 4 The Virtuous Cycle • “Good Management” Hypothesis o Principles of leadership and management of human resources tend to be ethical • Example: MGT 505 chapter on leadership = “Leading Positive Change” • Example: MGT 505 chapter = “Empowerment & Delegation” o Ethical leaders and managers seek to be good managers (to do things the right way) o Good leaders and managers seek to follow principles and be ethical Ethical Mgmt. Good Mgmt. 6 Best Practices • Codes of Ethics & Conduct • Human Resources/Strategy/Leadership perspective o o o o Ethics in Recruiting & Selection Ethics in Training & Development Ethics in Performance Assessment Empowering Ethical Employees • Promoting Ethical Leadership o And employee-friendly practices • Ethical Reporting • Diversity Management • Q: What, in your opinion, are the characteristics of an ethical leader? 7 Codes of Ethics/Conduct 8 What is a code of ethics/conduct? • Investopedia o A code of ethics is a guide of principles designed to help professionals conduct business honestly and with integrity. A code of ethics document may outline the mission and values of the business or organization, how professionals are supposed to approach problems, the ethical principles based on the organization's core values and the standards to which the professional will be held. • Wikipedia o Ethical codes are adopted by organizations to assist members in understanding the difference between 'right' and 'wrong' and in applying that understanding to their decisions. o Comparison vis-à-vis code of conduct: • A code of ethics will start by setting out the values that underpin the code and will describe a company's obligation to its stakeholders. The code is publicly available and addressed to anyone with an interest in the company's activities and the way it does business. It will include details of how the company plans to implement its values and vision, as well as guidance to staff on ethical standards and how to achieve them. • A code of conduct is generally addressed to and intended for employees alone. It usually sets out restrictions on behavior, and will be far more compliance or rules focused than value or principle focused. 9 Johnson & Johnson: Lessons • Johnson & Johnson credo o https://www.jnj.com/sites/default/files/pdf/jnj_ourcredo_english_us_8.5x 11_cmyk.pdf • Would argue that this closely predicted, enabled excellent Tylenol response in 1982 • Credo training o http://www.investor.jnj.com/2009sustainabilityreport/overview/transpare nt.html • Short videos o https://www.youtube.com/watch?v=knO6JjJXV6g o https://www.youtube.com/watch?v=GiqbJOrTwmo 10 McCraw and Codes • NYSE: Codes of Ethics should cover: • • Conflicts of interest; • Corporate opportunities; • Confidentiality; • Fair dealing; • Protection and proper use of company assets; • Compliance with laws, rules, and regulations (including insider trading laws); and • Encouraging the reporting of any illegal or unet...
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